Chapter 1

Business Information Systems: An

Overview

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 1

INFORMATION SYSTEMS
Why Do People Need Information?
◦ Individuals: Entertainment and enlightenment
◦ Businesses: Decision making and problem solving
◦ Gathering
◦ Storing
◦ Manipulating

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 2

Data, Information, and Systems
Data vs. Information
◦Data
◦ A “given” or fact: a number, a statement, or a
picture
◦ The raw materials in the production of
information
◦Information
◦ Data that have meaning within a context
◦ Raw data or data that have been manipulated

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 3

Data Manipulation
Raw data
◦ Time-consuming to read
◦ Difficult to understand

Manipulated Data
◦ Provides useful information

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 4

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 5
MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 6
GENERATING INFORMATION

Raw data are

processed in an IS to
create final useful
information
◦ Process: Manipulation
of data
◦ Computer-based ISs:
process data to
produce information
MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 7
 INFORMATION: IMPORTANT RESOURCE
Information
must be useful
◦ Relevant
◦ Complete
◦ Accurate
◦ Current
◦ Cost effective in
business

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 8

WHAT IS SYSTEM?
A system is a group of interrelated components working together
toward a common goal by accepting inputs and producing outputs in
an organized transformation process.
System will have the following basic interacting components
OUTPUTS AND INPUTS
• The main aim of a system is to produce an output which is
useful for its user.
• Inputs are the information that enters into the system for
processing.
• Output is the outcome of processing.

PROCESSOR(S)
• The processor is the element of a system that involves the actual
transformation of input into output.
• It is the operational component of a system. Processors may modify the
input either totally or partially, depending on the output specification.
• As the output specifications change, so does the processing. In some
cases, input is also modified to enable the processor for handling the
transformation.
CONTROL
• The control element guides the system.
• It is the decision–making subsystem that controls the pattern of
activities governing input, processing, and output.
• The behavior of a computer System is controlled by the Operating
System and software. In order to keep system in balance, what and
how much input is needed is determined by Output Specifications.

FEEDBACK
• Feedback provides the control in a active system.
• Positive feedback is routine in nature that encourages the
performance of the system.
• Negative feedback is informational in nature that provides the
controller with information for action.
ENVIRONMENT
• The environment is the “supersystem” within which an
organization operates.
• It is the source of external elements that strike on the system.
• It determines how a system must function.
• For example, vendors and competitors of organization’s environment, may
provide constraints that affect the actual performance of the business.

BOUNDARIES AND INTERFACE

• A system should be defined by its boundaries. Boundaries are the limits
that identify its components, processes, and interrelationship when it
interfaces with another system.
• Each system has boundaries that determine its sphere of influence and
control.
• The knowledge of the boundaries of a given system is crucial in
determining the nature of its interface with other systems for successful
design.
Types of System
Closed system: Stand-alone system
that has no contact with other
systems
Open system: System that interfaces
with other systems

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 13

Information and Managers
Systems thinking:
◦Viewing organization in terms of
suborganizations or subsystems

◦A framework for problem solving and

decision making

◦Managers focus on overall goals and

operations of business

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 14

Information and Managers (Cont.)
Systems thinking (Cont.)

◦Information Map: data and information flow

within an organization

◦Information Technology: all technologies

that facilitate construction and maintenance
of information systems

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 15

 The Benefits of Human-Computer Synergy
Synergy: combined
resources produce
output exceeding the
sum of the outputs of
the same resources
employed separately
Translates human
thought into efficient
processing of large
amounts of data
MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 16
Information Systems in Organizations
Data
Hardware
Software
People
Procedures

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 17

Trends
Power of computers increasing; prices dropping

Increase in programming variety and skill

Internet access faster and more reliable

Internet growth resulting in opportunities

Increasing ratio of computer-literate workforce

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 18

Components of an Information System

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The Four Stages of Data Processing
Input: Data are collected and entered into
computer
Data processing: Data are manipulated into
information using mathematical, statistical,
and other tools
Output: Information is displayed or
presented
Storage: Data and information are
maintained for later use
MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 20
Computer Equipment for
Information System

Input devices: introduce data into the IS

Processor: manipulates data through the IS

Output devices: display information

Storage devices: store data and information

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 21

Input-process-output-storage devices

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 22

 Major capabilities of Computerized information
systems
Perform high-speed high-volume, numerical computations
Provide fast, accurate, reliable, and inexpensive communication within and between
organizations, anytime, anyplace.
Store huge amounts of information in an easy to access, yet small space
Allow quick and inexpensive access to vast amounts of information worldwide at any time
Enable collaboration any where anytime
Increase the effectiveness and efficiency of people working in groups in one place or in several
locations
Vividly present information
Facilitate global trade
Enable automation of routing decision making
Can be wireless, thus supporting unique applications
 NEW ECONOMY VS. OLD ECONOMY

• OLD ECONOMY is used to describe the blue-chip

companies that led the economy during the early
parts of the twentieth century as industrialization
expanded around the world.

• NEW ECONOMY refers to the high-growth

industries of the internet era and are the new,
driving force of economic growth.

CHAPTER 1
New Economy vs. Old Economy
Example #1: Registering for Classes

◦ Old Economy: You would go to the Registrar’s Office on

campus with a paper registration document

◦ New Economy: You access your campus website, log into

registration site, and electronically register for classes
from anywhere
New Economy vs. Old Economy
Example #2: Buying and Selling Textbooks

◦ Old Economy: You go to the bookstore in person and

buy new or sell used books

◦ New Economy: You go online to the Publisher’s Web

site or to Web-based services such as Amazon.com
to buy or sell books
New Economy vs. Old Economy
Example #3: Paying for Goods, Checkout

◦ Old-old Economy: Customer selects goods, waits in

line for the cashier to key in price of items, and then
pays in cash
◦ Old Economy: The clerk swipes the barcode of each
item and customer pays in cash, credit, or debit.
Information scanned is available for immediate
analysis known as source-data automation.
ISs: From Recording Transactions
to Providing Expertise
Transaction Processing Systems (TPS)
◦ Record data and perform basic processing
◦ Cash registers and ATMs

Management Information Systems (MIS)

◦ Recorded transactions and other data produce
information for problem solving and decision
making

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 28

Types of MISs
Decision Support Systems (DSS)
◦ Contain models, or formulas, that manipulate data
into information
◦ Often answer “what if?” questions

Group Decision Support Systems (GDSS)

◦ Generate ideas, establish priorities, and reach
decisions in group environment

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 29

Types of MISs (Cont.)
Executive Information Systems (EIS)
◦ Can gather information from vast amounts of data
for high-level executives
◦ Highly useful in control and planning

Expert Systems (ES)

◦ Programmed with human expertise
◦ Can help solve problems of unstructured nature

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 30

Types of MISs (Cont.)
Geographic Information Systems (GIS)
◦ Represents local conditions or features
◦ Allows planning, decision-making, and monitoring
of local conditions or activities

On-demand Output
◦ Managers can obtain reports tailored to their
needs at any time

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 31

ISs in Functional Business
Areas
Accounting
◦ Record business transactions, produce periodic
financial statements, and create reports required
by law
Finance
◦ Organize budgets, manage the flow of cash,
analyze investments, and make decisions that
could reduce interest payments and increase
revenues

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 32

ISs in Functional Business Areas
(Cont.)
Marketing

◦ Analyze demand for various products in

different regions and population groups

Human Resources

◦ Help with record keeping and employee

evaluation

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 33

ISs in Different Business Sectors

Manufacturing
◦Allocate resources such as personnel, raw
material, and time
◦Control inventory, process customer
orders, prepare production schedules,
perform quality assurance, and prepare
shipping documents

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 34

ISs in Different Business Sectors
(Cont.)
Service
◦ ISs are often the backbone of service organizations
Retail
◦ Some retail stores (e.g., Wal-Mart, Sears) are now
linked to communication networks by satellite
◦ Management can determine which items move
quickly and which do not

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 35

ISs in Different Business Sectors
(Cont.)
New Businesses
◦ ISs have made new products and services
possible, such as credit reports and shipment
tracking
Government
◦ Tax authorities, national insurance and
welfare agencies, defense departments,
economic organizations, immigration
authorities

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 36

Shared Data Resources
Effective way to operate: different systems
share same data from same pool
Company’s database: one of the most
powerful resources
Categorized and structured data can be
manipulated to produce useful information

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 37

Shared Data Resources (Cont.)

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 38

E-Commerce
Business-to-business and business-to-
consumer transactions done electronically
via networks
Database management online makes
information cheaper to distribute
E-commerce is now synonymous with
“doing business on the Internet”

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 39

Why Study IS?
Knowledge Workers
◦ Employers seek computer-literate professionals
who know how to use information technology
Degrees in IS
◦ Computer Science and Management
Information Systems
Information Systems Careers
◦ Systems analyst, specialist in enterprise
resource planning (ERP), database
administrator, telecommunications specialist,
consulting, etc.

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 40

Ethical and Societal Issues
The Not-So-Bright Side
Consumer Privacy
◦ Organizations collect (and sometimes sell) huge
amounts of data on individuals

Employee Privacy
◦ IT supports remote monitoring of employees,
violating privacy and creating stress

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 41

Ethical and Societal Issues
The Not-So-Bright Side

Freedom of Speech

◦Opportunities increase for pornography,

hate speech, intellectual property crime,
and other intrusions

◦Prevention may abridge free speech

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 42

Ethical and Societal Issues
The Not-So-Bright Side
IT Professionalism
◦No mandatory or enforced code of ethics for
IT professionals--unlike other professions
Social Inequality
◦Less than 20% of the world’s population
have ever used a PC; less than 3% have
Internet access

MANAGEMENT INFORMATION SYSTEMS, 4TH EDITION 43